Accounting Interview Questions and Answers
Before appearing for your Accounting job interview, it is necessary to get yourself prepared with few questions that are frequently asked by interviewers. For any department in an accounting firm, some basic questions are generally asked and so appropriate answers must be prepared by candidate. The following questions and answers will provide an insight on what kind of questions can be expected during the interview.
Q: After working here for few years, will you take up my job designation?
A: Yes, if you have been promoted, I would like to take up your role. Under your guidance and on my past and current performance I would qualify as one of the candidates for your job designation.
Q: You already know promotions are slow in our company. What is your view if after working for five years, you are not promoted?
A: I believe every company has its own methods of giving promotions to employees. If I find my job satisfactory where there is an opportunity to learn and grow, I won’t mind not getting promoted. Also, as I am a very patient person, I would wait for the time the company thinks I deserve to get promoted. Meanwhile, I hope the company is following different methods of keeping employees motivated.
Q: Explain how you will prepare a cash flow statement.
A. From the net income, adjustments have to be made for all miscellaneous expenditure, depreciation, dividend or interest paid or received and changes in working capital to arrive at the cash flows from operating activities.
Cash flows from investing activities are arrived by making adjustments for all receipts or purchase from sale of long term assets or investments and capital expenditures.
Cash flows from financing activities are arrived by making adjustments for issued share capital, loans or debentures, interest or dividend paid and redemption of preference shares, debentures or loans.
The total change in cash is arrived by adding all cash flows from operating, investing and financing activities. Subtracting the opening cash balance of the period from this change in cash allows you to arrive at the closing cash balance of the period.
Q: Explain the term working capital?
A: The term working capital means the difference between current assets and current liabilities. The amount of current assets and current liabilities are obtained from a company’s balance sheet. Working capital denotes the amount of capital needed by a company for day to day functioning. Working capital is also known as operating capital.
Q: Can a company show positive cash flows but be in great trouble?
A: Yes, this is because the company may be selling off its long term assets and delaying payables. Therefore, the source of cash flow will be investment activities and cash flow from operations will be negative and hence the company will be in trouble.
Q: Can a company showing a positive net income go bankrupt?
A: Yes, a company which shows a positive net income can go bankrupt. It usually happens when a company has slow recovery of accounts receivables, increased inventories and accounts payable.
Q: An increase in accounts receivable is shown as a cash reduction in the cash flow statement. Explain why?
A: An increase in accounts receivables increases the net income and hence the company can expect payment in the future. In order to adjust the net income to cash flow, the increase in accounts receivables is deducted from net income. Such adjustment is done because cash has yet to be received for accounts receivable.
Q: Explain the term goodwill.
A: Goodwill is an intangible asset in accounting. Goodwill is accounted for when a company acquires another company. Such acquisitions increase the value of the combined firm and so the purchase price paid exceeds the market value of the acquired company and thus this difference is termed as goodwill and is necessary to be recorded in the acquiring company’s books.
Q: Your resume shows that you were fired twice from your job. What do you have to say about this?
A: Yes, I was fired twice but this has made me more stronger. After being fired, I got jobs in reputed firms which gave me more responsibility and offered me more salary. It’s all about how you take this situation. I handled it in a more positive way and have learned from both the situation.
Q: Your resume shows gap in your employment, what was the reason for this gap?
A: I had a baby and since there was no one to take care of my baby, I resigned from my job. It was difficult for me to leave my job as I had been working for so many years but at that time my priority was my baby. Now that he has grown up and there is a care taker to look after him, I can devote myself properly to my job. I am looking forward to making a significant contribution to your company.
Q: Have you applied or appeared for interview in any other company?
A: For such a question, you should always answer the truth. If you have applied for other interviews as well you should stress the preference for the current role . Also, the other interviews applied should be in the same occupational role. With such an answer, an image of consistency is created in the eyes of the interviewer. One point to remember is to never mention about the companies that have rejected you. The basic objective of the interviewer through this question is that they want to find out whether you are serious for the job and your consistency in the job role and also how much value you have for the current job interview.
Q:. In choosing your university what factors influenced your choice?
A: Answer this question honestly. You can include your in your answer factors such as availability of that particular course which you opted, location preference, area of interest, teaching quality of the university, cost factors and also reputation of the university. Provide a clear and convincing answer to the interviewer.
Q: In accounting, how many types of business transactions are there?
A: There are two types of business transactions in accounting. Capital transactions are those that involve fixed assets and such type of transaction will be recorded in balance sheet. Revenue transactions are those that involve profit or loss activity such as goods sold and purchased by the company. These expenses are recorded in the profit or loss statement of the company.
Q: What is departmental accounting?
A: Departmental accounting is a type of accounting where separate accounts for each department are created and maintained. Departmental accounting records activities and financial information about each department. Each department has its own accounting system to keep track of revenues and expenses. Such type of accounting helps in determining which department is profitable.
Q: Define the basic accounting equation?
A: The basic accounting equation represents the relationship between assets, liabilities and owner’s equity of a business. This equation is expressed as assets equal to liabilities plus capital. When a company keeps accurate records, the accounting equation will always be in balance that means assets will always be equal to liabilities plus capital.
Categories: Job Interview Tags: Accounting Questions, Interview Question Answers